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Bill Daley: Lawmakers See Perils Of Debt Inaction

NPR's Steve Inskeep sat down Tuesday with Bill Daley, President Obama's chief of staff, and asked him about the president's address on cutting the deficit and raising the debt ceiling. The following is the transcript of the interview:

Steve Inskeep: Why does the president seem to be advocating this week for a bill that doesn't exist, that's not being considered in either the Senate or the House?

Bill Daley: Well, when the president spoke to the American people [Monday] night, and people in this town would probably be surprised to know that most American people have probably not focused on the debate that's been going on here. But as we enter this last week, and a very important discussion, he thought it was important that the American people understood what was at stake, what his position has been.

Obviously, he believes that there ought to be a balance to the real solutions to the deficit. There ought to be a balanced approach including revenue. He's disappointed that at this point neither bill includes revenue that's primarily being discussed. But he thought it was important to lay the entire discussion out to the American people, and not just on the bills that were before the Congress.

But doesn't this emphasize that for all practical purposes, even your allies in Congress have effectively surrendered? You're talking about different versions of the Republican version of events — the way to get out of this.

Well, that's not true. Sen. [Harry] Reid has a bill that has almost $3 trillion of deficit reduction. Let's remember, the president brought to this debate, this discussion, the issue of deficit reduction. ... Debt ceiling has been extended numerous times over the last number of years. But over the last, since I've been here, six months, the president has talked about serious deficit reduction, that would probably coincide with the fact that the debt ceiling had to be extended. So from the point of view of whether this has been a good debate to get the American people and the political system to finally address the deficit, I think that's been successful. It's unfortunate right now that it looks as though ... neither of the bills are going to include revenue, which is seriously needed if we are going to have a serious attempt to reduce the deficit.

When I asked people on Twitter what they would do if they had the opportunity to ask you, one of the questions came back: "Why are the Democrats folding while the Republicans stand firm?"

Democrats aren't folding at all. I think there is an attempt to get to a compromise. There is, as the president stated last night, there is a very large group within the House Republican caucus that said they will do nothing about a balanced approach, including revenue. So we have attempted, as has been made public, that would include revenue. We came very close. It was a serious attempt by both sides. It's unfortunate that didn't succeed, because I think the American people would have felt very good about leadership bringing to conclusion negotiations that would have been well-balanced.

Interesting that you say it was a serious attempt by both sides, because the Democratic Senatorial Campaign Committee has sent out an email — I presume it's gone to activists and reporters — which says, among other things, that [House Speaker John] Boehner and the GOP will walk away from any plan that doesn't cripple President Obama. Do you believe that and, if so, why were you negotiating with them at all?

Well, I think we were negotiating because he is the speaker and represents the majority of the United States House, and obviously in our system the House has to vote for a package. And we believe that the speaker was well-motivated to do a deal. I think his difficulty was selling his leadership and his caucus that a deal that would include any revenue would, was going to be passable in their caucus. I think there is no question that their deal would have passed the House of Representatives, maybe not with the number he'd need in his caucus. But that's unfortunate because the American people would have benefitted from such a deal.

Meaning you think that Boehner was sincere, not that he's determined to walk away from any deal?

I don't think he's determined to walk away from any deal. I think the speaker has political realities as the head of his party in the House that he's got to deal with. As does the president. The president heard enormous blowback in a negative way from his supporters and from many special interest groups that were going to be negatively affected by serious deficit reduction. The president was willing to take that criticism because he believed a deal that strengthened Medicare, strengthened Medicaid and was balanced was the right approach.

Is the situation any closer to a resolution, as we speak, late on this Tuesday afternoon, than it was 24 hours ago?

I would think that more and more people by the hour are coming to realize the catastrophic potential negatives that would occur if the United States Congress did not act to meet their obligations.

People in Congress?

It is a vote of Congress. Congress has the obligation, not the president, to deal with the debt and the extension of the deficit. Oh, I think they are beginning to realize the seriousness. Not only are they hearing from their constituents — they're hearing from business interests, even though the markets have not reacted in a substantially negative way yet. One is playing with fire if they think that can dabble with full faith in the credit of the United States of America.

You were seen as someone who could talk to the business community, who was trusted by the business community, who could explain this president to a very suspicious business community. The Chamber of Commerce, just across the park from the White House here, has put out a statement that I read as supporting Speaker Boehner's plan, the plan that he is pushing in the House, which is deemed unacceptable by the White House. What do you make of that?

Well, I spoke with Mr. [Thomas] Donahue, who runs the Chamber of Commerce, about an hour ago, and he indicated to me that he was sending a letter to all the Congress, encouraging them to bring this to some resolution so that it was not done in a — so the impasse would not negatively affect the economy. He did not indicate to me that he was supportive of Speaker Boehner's plan at all. So I've not seen the letter, but in my discussion with him, he sure did not indicate that to me.

This was a letter that seemed to be very positive about this bill, as well as the importance of doing something.

Well, that's unfortunate, because for most of Mr. Donahue's members, or others who are not members of the chamber, every business leader I've talked to has said to me, 'What we need out of Washington is certainty.' Six months is not certainty. If you're in a business, you don't plan six months — you try to plan on an annual basis. Most companies at this time of year are preparing their [20]13 budgets and their plans, and their boards will vote on them in September. They don't do six-months plans. That's not the way you run a government. To keep this uncertainty and have the prospect that in six months, during a difficult economy, that we would go through this process again in order to solve the problems of the nation is not the way a great nation operates.

When you say six months, you are referring to the Boehner bill, which would lead to another debt ceiling debate.

Yeah. The one you're referring to that Mr. Donahue allegedly endorsed.

Because you mention certainty and the desire for certainty — as you read the Constitution, as you read the laws and the political situation, does the president, by some means, have the power to ensure certainty? To state that if Congress does not come to an agreement, the president can deal with the situation by the following means?

The lawyers ... which the president has received advice from, and just about every serious constitutional lawyer out there has dismissed the notion that the president could usurp the obligations of Congress and take it upon himself the ability to act when Congress doesn't.

Let me make sure I am clear on this. There is the 14th Amendment route, there are other routes that have been discussed, there is simply defying the law as President Lincoln did during the Civil War.

[Laughing] I don't think the American people would find it appropriate for the president of the United States to defy the laws of the nation and its Constitution, without their belief that that president should be impeached. And this president isn't going to do anything against the Constitution, against the laws of the United States of America.

So is the president powerless in this situation?

The Congress has the power to act. They have the obligation to act. The president cannot usurp the power that's in the Congress. So it's up to the Congress to live up to their obligation and act, and we expect that they will.

Well, let me ask another question related to that. You clearly have Republicans in Congress that are willing to go past Aug. 2, risk default or whatever might happen after that date. If a bill reaches the president's desk and it is unacceptable for you — for example, it would only last for six months and then there'd be another debt-ceiling fight — and that's the only bill the president has, and it's Aug. 1 or Aug. 2, will the president veto that bill?

It doesn't do any good to go through. The president has talked and the senior advisers have said that the House bill ... is unacceptable to him. And the senior advisers will recommend the veto of that bill. That bill will not pass the Senate as it may pass the House. So a hypothetical and jumping around, but the fact of the matter is the Boehner bill that's been presented will not pass the United States Senate as it is presented at the House of Representatives.

Will the president veto any bill?

I'm not going to get into hypotheticals. Every leader of the Congress — the leadership on the Democrats and the Republican sides in the United States have said that they believe the ceiling will be extended. They will not — they will reach their obligations and extend the debt ceiling so that the full faith and credit of the United States is upheld.

Two quick questions. There's been reference by the White House spokesman to a Plan B. What is it?

[Laughing] I'd like to know. I have no idea what Plan B is.

Working on a Plan B?

I think there's lots of ideas being floated around on the Hill and in conversations here, but there is no secret plan that's been agreed to by anybody. Again, this is an obligation of Congress.

One last thing: Speaker Boehner has insisted that his last offer was still on the table. It included increased revenues — $800 billion over the course of a decade — as well as substantial spending cuts. It wasn't exactly what the president wanted, but it included revenue increases and a lot of spending cuts. Why not just call back the speaker and say yes to that?

Well, I think we're still waiting for a call back from the speaker. The question isn't whether Speaker Boehner's plan, which the president and he had negotiated on for a long time and Congressman [Eric] Cantor was involved with, they walked away from that deal. They walked away from their own deal. And ...

He's publicly said it's still on the table. Why not just accept it? See what happens?

Well, we'd like to see the deal the speaker's referring to. The ones that we had negotiated, the one that we had negotiated, and the one that the speaker and the president thought was very close — we probably were, in reality, about 85 percent of the way there. The speaker had not agreed to everything on his own, that you referred to as his own deal, and there were still items to be negotiated. My sense was it could have been brought to conclusion very quickly. And that's what we were attempting to do when there seemed to be radio silence from the Hill regarding that own deal. But I think if at some point, right now, the speaker has been very straightforward and public in saying that's off the table, and he is moving forward on a plan that he's attempting to pass ... and I think until the House acts, we probably ought to wait and see exactly the position of the speaker and the Republican Party ...

And are you sure that Aug. 2 is the last time you have ... ?

Yeah.

Because there have been public estimates from the outside of tax revenues coming in suggesting you have another few days.

Well, look it — some people as far as I've heard about the public speculation, I guess if you were to run down ...

Well, these are investment firms making estimates.

So, well, there are a lot of investment firms that didn't do right by their shareholders or the American people. If there are some who believe that the checkbook of America should be run down to zero and then take action, well, I don't think you, a family, runs their finances that way, and the United States government shouldn't run their checkbook down to zero before they begin to take action. So there is no doubt Aug. 2 is the date. To go beyond that is not possible. Some people would dream of that to avoid making a decision, but that's not the real situation that America faces right now. The reality is Aug. 2 is the deadline.